Sure, the hype around mobile advertising seems to know no bounds. And that might be tiresome, but many think the revenue will finally start flowing as the wireless landscape evolves. In fact, many say that mobile ads are, in fact, critical to the HSPA+ and 4G business model.
The argument for mobile ads is familiar. The idea is to reach your targets trough the one thing many clutch to themselves tighter than their children: their phones.
The market today is still very small. Juniper Research says worldwide spending in 2009 on mobile advertising was a relatively paltry $1.4 billion (less than one third of one percent of total ad revenue across all channels). Obstacles linger for each of the stakeholders: Brands fear ending up with a fragmented identity through muddled and non-comprehensive strategies that are hampered by device diversity and disparate operator deals. For operators, there are complex technology needs to get data compiled from several network sources to craft targeted campaigns. Operators also simply need to see a role for themselves in the advertising value chain: revenue share models often cut the carrier out entirely, with ads existing as an over-the-top companion to third-party applications, mostly in the form of banner ads, which lack a high-impact effect on subscribers.
Mobile advertising might be lackluster so far, but there are some drivers that could soon change that. One is obvious: wider deployment of wireless broadband and app-ready smartphone devices. But further adding to the momentum is the fact that Apple Inc. and Google Inc. both recently purchased mobile ad firms (AdMob and Quattro Wireless, respectively, together transactions worth more than $1 billion). Meanwhile, while new form factors like Apple’s iPad are also providing a wider range of visual options for advertisers. In fact, Gartner Inc. predicts by 2013, there will be 1.82 billion smart devices out there, finally outstripping wired online endpoints — traditional PCs will number only 1.78 billion.
“Mobile advertising is poised to take full advantage of opportunities presented by the diffusion of advanced devices such as the smartphone,” said Heather Way, research analyst at Parks Associates.
The applications-based, third-party advertising approach is perhaps the most familiar form deployed today — an approach that cuts the operator out of the equation. But advertisers can in theory reach wider, yet more targeted audiences through permission and preference-based mobile marketing that leverages carrier network capabilities in a way that simple application-based banner ads can’t. In return, operators can use advertising to develop new business models and offer more personalized experiences to their subscribers, while they gain a revenue share from the campaigns.
That’s an evolution that not only makes sense, but will become critical for carriers to embrace as HSPA+ and 4G begin to be deployed.
“Treating mobile broadband like the flat-rate Internet fixed-line model has driven a situation where traffic is growing way beyond the revenue,” said Pat McCarthy, vice president of global marketing for service delivery solutions at Telcordia. “Operators like the revenue and subscriber growth, but it’s an expensive service to deploy. The real problem is the peak usage. Between 6 and 9 p.m., no profit goes to service provider, because there is a tremendous load on the network but no extra money for it.”
To read the full, in-depth article on our sister site, Billing & OSS World, click here or on the source link below.
Please also see the companion to this article, Crafting Mobile Ad Campaigns: Forget Location?.
